Dairy markets show mixed signals as butter surges and NDM dips. Global factors, including New Zealand’s drought and Chinese demand, could support prices. With the milk-feed ratio at 2.15, profitability remains tight. In our comprehensive report, get the full scoop on CME prices, regional production, and industry trends.
Summary:
The CME Dairy Market Report from February 11, 2025, overviews the current dairy market. Butter and cheese prices have increased, but NDM and dry whey prices have fallen, showing mixed signals. The report highlights how different regions are producing various amounts of milk, and it talks about future trends like a drought in New Zealand and possible increased dairy imports from China. Even though milk prices are high, feed costs are also rising, tightening profit margins. The report also discusses how the dairy industry is changing to meet new consumer demands for healthier, eco-friendly products. Technology in dairy farming is advancing, which could help the industry grow. It also provides updates on the 2025 Farm Bill and weather forecasts for major dairy regions in the U.S. Overall, the market is dynamic, with many factors affecting supply and demand, making it a challenging time for dairy farmers.
Key Takeaways:
- Butter prices surged, reaching their highest level in recent weeks, driven by strong buyer interest.
- Cheese markets showed modest gains despite limited trading activity, reflecting cautious market sentiment.
- NDM experienced the largest price decline, influenced by significant selling pressure and possible increased production.
- Dry whey prices retreated, with the market showing limited activity but apparent downward pressure.
- Class III milk futures indicate an upward trend, reflecting expectations of tighter milk supplies and strong demand.
- High feed prices continue challenging dairy farm margins, as reflected in the milk-feed price ratio.
- Regional milk production growth varies, with the Midwest and Northeast increasing while the Southeast faces declining.
- Global factors, such as drought in New Zealand and potential recovery in Chinese demand, could support global dairy prices.
- The growing demand for health-conscious and environmentally friendly dairy products is influencing the market.
- U.S. policy discussions on the 2025 Farm Bill could impact dairy support programs and export opportunities.
- Technological advancements, like automated milking systems and genomic testing, are becoming more accessible to farmers.
- Weather conditions across the U.S. could affect milk production and feed costs.
The Chicago Mercantile Exchange (CME) dairy market experienced mixed movements today, with butter and cheese prices showing strength while nonfat dry milk (NDM) and dry whey faced downward pressure.
Cash Market Highlights
Butter led the gains, closing at $2.4300/lb, up 5.00 cents from the previous session. The market saw active trading with 12 trades, one bid, and five offers, indicating strong buyer interest. This surge recently pushed butter prices to their highest level, potentially reflecting tightening cream supplies or increased demand from food service sectors.
Cheese markets also showed positive movement:
- Cheddar blocks settled at $1.9075/lb, up 0.50 cents.
- Cheddar barrels closed at $1.8175/lb, gaining 0.25 cents.
The cheese market saw limited trading activity, with only one trade in barrels and none in blocks, suggesting cautious sentiment among market participants.
NDM Grade A experienced the most significant decline, dropping 2.50 cents to close at $1.3000/lb. The market was active with 15 trades, indicating considerable selling pressure. This downturn may reflect increased production or softer export demand.
Dry whey prices also retreated, settling at $0.5675/lb, down 2.00 cents. The market showed limited activity but apparent downward pressure with only two trades.
Daily CME Cash Dairy Product Prices
| Product | Price ($/lb) | Change (¢/lb) | Trades | Bids | Offers |
|---|---|---|---|---|---|
| Butter | 2.4300 | +5.00 | 12 | 1 | 5 |
| Cheddar Block | 1.9075 | +0.50 | 0 | 1 | 0 |
| Cheddar Barrel | 1.8175 | +0.25 | 1 | 1 | 0 |
| NDM Grade A | 1.3000 | -2.50 | 15 | 5 | 0 |
| Dry Whey | 0.5675 | -2.00 | 2 | 1 | 4 |
Weekly Trends
Compare current averages to the prior week:
Weekly CME Cash Dairy Product Prices
| Product | Current Avg. ($/lb) | Prior Week Avg. ($/lb) | Weekly Volume |
|---|---|---|---|
| Butter | 2.4050 | 2.4100 | 12 |
| Cheddar Block | 1.9050 | 1.8685 | 6 |
| Cheddar Barrel | 1.8163 | 1.7970 | 5 |
| NDM Grade A | 1.3125 | 1.3380 | 15 |
| Dry Whey | 0.5775 | 0.6055 | 2 |
Futures Market Update
Class III milk futures for February 2025 settled at $20.21/cwt, marking an increase of 0.15 cents from yesterday’s close. March 2025 futures finished at $20.35/cwt, and April 2025 closed at $20.48/cwt. This upward trend signals an expectation of tighter milk supplies and robust demand in the coming months.
Meanwhile, Class IV milk futures for February 2025 concluded at $19.85/cwt, showing a slight decline of 0.10 cents. March and April 2025 futures finished slightly higher at $19.92/cwt and $20.05/cwt, respectively.
Feed Market Trends
Corn futures for March 2025 delivery ended at $5.85/bushel, up 3 cents. May 2025 corn futures settled at $5.92/bushel. Soybean meal futures for March 2025 closed at $385.50/short ton, down by $2.00. These feed prices remain pressures on dairy farm margins, posing challenges for profitability.
Milk-Feed Price Ratio
The milk-feed price ratio for February 2025 is 2.15, hovering just below the 2.20 level deemed necessary for sustainable dairy herd growth. Although milk prices shine relatively strong, ongoing high feed costs hitch overall profitability.
Regional Production Data
| Region | Milk Production (million lbs) | Change from Last Year |
|---|---|---|
| Midwest | 5,250 | +2.3% |
| Northeast | 3,780 | +1.5% |
| West | 4,920 | +0.8% |
| Southeast | 1,650 | -1.2% |
The Midwest and Northeast enjoy more substantial production growth, whereas the Southeast faces ongoing challenges.
Market Analysis: Understanding Today’s Dairy Market Movements
The dairy market’s mixed performance on February 11, 2025, reflects a complex interplay of supply, demand, and global economic factors. On the supply side, the USDA’s downward revision of the 2025 milk production forecast to 227.2 billion pounds has created upward pressure on some dairy product prices. This reduction, attributed to lower milk-per-cow yields and adjustments in dairy cow inventories, is partially offset by favorable weather conditions in some regions. Globally, milk supply is forecasted to grow by 0.8% in 2025, with all significant exporting regions expecting gains for the first time since 2020.
Demand dynamics are equally influential, with U.S. dairy exports remaining strong at $8.2 billion in 2024 despite recent trade tensions. China’s projected 2% year-on-year growth in dairy import volumes 2025 reverses a three-year decline, potentially supporting prices for certain products, particularly whole milk powder. Domestically, shifting consumer preferences towards health-conscious and environmentally friendly products reshapes demand patterns, especially for functional dairy products and plant-based alternatives.
Economic and policy factors add another layer of complexity to the market. While currently favorable, feed costs remain subject to global commodity market fluctuations, directly impacting dairy farm profitability. Implementing new tariffs, ongoing trade disputes, and the anticipated changes to the Federal Milk Marketing Order pricing formulas in June 2025 create market uncertainty. These factors collectively explain the day’s mixed price movements: significant gains in cheddar prices reflecting strong demand, stability in butter prices suggesting a supply-demand balance, and slight declines in nonfat dry milk and dry whey prices potentially linked to global production increases or shifts in export demand.
Global Market Influence
Recent drought reports in New Zealand, a key global player in dairy exports, hint at possible support for higher global dairy prices if production is notably affected. Due to these dry conditions, New Zealand’s milk production forecast for the 2024-2025 season has been adjusted downward by 2%.
Moreover, China’s dairy import volumes are poised to grow by 2% year-on-year in 2025, turning around a three-year decline. This potential upturn in Chinese demand might buoy global dairy prices, especially for whole milk powder and whey products.
Consumer Trends and Industry Outlook
The dairy industry is amid a shift toward health-conscious and environmentally friendly products. Demand for functional dairy offerings like yogurt with probiotics and options such as lactose-free and fat-reduced products is rising. The value-added dairy product sector is predicted to expand at a CAGR of 4.5% through 2030.
The USDA projects U.S. milk production hitting 227.2 billion pounds in 2025, with an all-milk price expected at $23.05 per hundredweight. While this hints at a potentially favorable market for dairy producers, profitability still largely hinges on input costs.
Policy Updates
The U.S. Congress is debating the 2025 Farm Bill, where potential revisions to dairy support programs are on the table. The National Milk Producers Federation is pushing for enhancements to the Dairy Margin Coverage (DMC) program, advocating for a refined feed cost formula that accurately depicts actual on-farm costs.
In addition, U.S. and UK trade negotiations are progressing, holding potential repercussions for dairy export ventures. A suggested reduction in non-tariff barriers could pave the way for new markets for U.S. cheese and butter exports.
Technological Advancements
Precision dairy farming technologies are gaining momentum. Automated milking systems now service approximately 5% of U.S. dairy farms, with anticipated growth in adoption rates. These innovations can bolster labor efficiency and cow comfort.
Widespread assimilation of genomic testing continues to allow farmers more incisive breeding choices, augmenting herd genetics. Over the past year, genomic testing costs have decreased by 15%, enhancing its accessibility for medium-sized dairy enterprises.
Weather Outlook
Here’s a brief weather forecast for key dairy-producing regions across the U.S.:
- Midwest: Predicted above-average temperatures with near-normal precipitation for the next two weeks could facilitate an early start to the spring flush.
- Northeast: Anticipate colder-than-normal temperatures accompanied by above-average snowfall, potentially impeding milk transport in certain areas.
- West: Persisting drought conditions in parts of California and the Southwest may influence feed costs and water availability for dairy operations.
- Southeast: Expect warmer-than-average temperatures with below-normal rainfall, potentially stressing dairy cows and affecting milk output.
Looking Ahead
As we navigate further into 2025, several critical factors will be under scrutiny by market participants:
- The spring flush production outlook across critical dairy regions
- Export demand dynamics, predominantly from Asian markets
- Changes in domestic consumption trends amid evolving economic landscapes
- Feeding costs and their ramifications on dairy farm profitability
- Effects following the adoption of new farm bill mandates
- The proliferation of next-gen dairy farming technologies
The dairy market remains vibrant, with today’s mixed outcomes underscoring the intricate balance of supply and demand forces across distinct product segments. Despite generally supportive price levels for dairy farm revenues, the industry grapples with rising input costs and shifting consumer inclinations. It’s advisable for farmers to vigilantly track the market milieu and strategize risk management to navigate the fluctuating market landscape adeptly.
Learn more:
- 2024’s Shocking Milk Price Trends: Declining Production and Surprising Market Gaps
- Is 2024 Shaping Up a Disappointing Year for Dairy Exports and Milk Yields?
- US Dairy Farmers’ Revenue and Expenditure Rise Slightly in March
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